I've heard that too. I have to agree with ZeaLitY that it was probably more like the Home and Another Dimensions merging, rather than the whole thing.
Now, I always assumed that Schala and Kid didn't merge. With Schala freed, I've assumed that Kid's past was being rewritten as well and it was simply reflecting in her changing speech pattern.
One of my reasons for this is this, is that in the orphanage fire, Kid's speech is normal. Knowing from her history, we know she was forced to live on her own at a young age. It's known that social, political, and economic factors do affect the development of accents and dialects in children. Additionally, children can pick up new languages and even accents at a surprising rate. So I think it's safe to assume she could have picked up the accent by frequently associating with others who had it.
However, when you free Schala, we know time is altered and the paradoxical dimensions are done away with. In my honest opinion, this also means that the orphanage never burns down, Lucca is never kidnapped and probably killed, and Kid grows up in a stable, nurturing environment. Her past no longer includes living on the street or associating with whoever she picked up the accent from. Thus, her speech patterns change as we're "listening." We really don't have too many verbal cues to differentiate between Schala and Kid, aside from the now missing accent, which I think has led to the impression they were merging. So the part in the ending where she reassumes the "accent" momentarily may have just have been an attempt at humor.
As for what happens after the game, I believe Kid sets off from Guardia to look for Serge after the end, while Schala departs to places unknown.
Another assumption stems from that infamous photograph in the ending. Many site that the dress she is wearing is a wedding dress (sari), but we don't know that. Indian, Arabic, and other influences appear frequently in the Chrono series of games, but nor are they sticking straight those cultures. It's entirely possible it's a photograph of Janus and her or that she also returned to the present and began a new life herself. I don't think she merged at all with what can be considered a totally different person.
